Here are some thoughts from the wonderful book The Bogleheads' Guide to Investing
People tend to make three types of insurance mistakes:
1. Insuring the unimportant while ignoring the critical.
2. Insuring based on the odds of misfortune.
3. Insuring against specific, narrow circumstances.
The book details what it means by each of these, but let me give you an example for each insurance mistake:
1. Buying life insurance with no dependents but not buying disability insurance.
2. Not buying life insurance because everyone in your family has lived to a ripe, old age.
3. Flight insurance.
Personally, I insure for big disasters/accidents (homeowner's, car), loss of income (life, disability), and potential big-cost events (umbrella.) I ignore the minor (and usually very expensive) insurance options.
For more tips on getting and saving on insurance, see Best of Free Money Finance: Insurance Posts.
Comments